Peapod to open 3 suburban sites for grocery pick-up

Peapod, the Internet-based grocery retailer, will open three locations in the Chicago area this year where customers can pick up their orders rather than waiting for home delivery.

The Skokie-based company plans to open pick-up sites in Palatine in early October and in Schaumburg later in the month. A third location will open in Deerfield in early December.

It's a decided change in direction for Peapod, which was started in Evanston in 1989, became a wholly owned subsidiary of Royal Ahold in 2001 and until two weeks ago, offered only grocery delivery. Late last month, Peapod began offering pick-up service at a Boston-area Stop & Shop.

"Our customers are just on the go customers and we're just offering them another option," said Peapod spokeswoman Elana Margolis.

The freestanding pick-up locations will be the company's second experiment this year to broaden its customer base. In May, it rolled out interactive grocery store "shelves" at the CTA's State and Lake station. Consumers were able to use their smart phones to scan and buy items and have them delivered the next day. That program ended in July but a new version of it is expected in the fall.

Only customers who live within a 10-mile radius of the three locations will be allowed to choose to pick up their orders in one-hour time slots, seven days a week. "We want to be able to control how many people are coming through the pick-up location," Margolis said. "We want to be able to control the flow."

At first, the pick-up service will be free, she said, but customers eventually will be charged $2.95 to retrieve their orders. That compares with Chicago-area delivery fees that start at $6.95.

The municipalities will not benefit from any increase in sales taxes, because all orders will continue to be processed through Peapod's Lake Zurich facility.

Margolis said the company would evaluate the three locations before deciding whether to open others. If it does expands, the company has plenty of empty storefronts from which to choose. The Deerfield location, for instance, is a former Amcore bank building.

Last month, Royal Ahold, based in Amsterdam and the parent of Stop & Shop and Giant supermarket chains in the United States, reported a 24.6 percent in second-quarter net income. Revenues in its U.S. businesses grew 17.3 percent.

Peapod declined to detail its financial performance. According to trade publication Internet retailer, Peapod's sales last year rose 6 percent to an estimated $479 million.